Complaince Simplified

Tag Archives: GST Monthly Returns.

The fear that three returns in a month and one annual return under the proposed Goods and Services Tax (GST) would make the whole process very cumbersome and compliance-heavy is unfounded and exaggerated, said Revenue Secretary Hasmukh Adhia in an interaction with media here today.

Explaining how filing returns would not be as cumbersome as it is made out to be, Adhia said that when a supplier uploads details of the sales invoices generated in the GST system, and files GST Return-I, the details from the suppliers GSTR-I automatically gets updated in the GST Return II (GSTR-II) of the purchaser. All the recipient needs to do is amend or modify and file the GSTR-II by 15th of every month.

By 17th of the month both the supplier and the recipient would have to reconcile the invoice details and file the third return (GSTR-III) by 20th of the month.

“So what looks like three returns in a month is effectively just one return, and the other two are taken care of with little efforts of the assessee” .

Under the GST, all registered taxable entities have to file three monthly returns and one annual return (see Table). The first return is for all the sales made by the taxpayer, the second one is for the purchases and the third monthly return is a composite return of all sales and purchases. So, in a year a total 37 returns have to be filed by assessees.

Tax experts and businesses have expressed their concern that three returns in a month would mean a huge compliance burden on taxpayers especially for small traders and SMEs.

GST, which is set to roll out from July 1, is expected to see eight million taxpayers come under the new tax regime, with more than 2 billion invoices expected to be filed every month. India’s biggest tax reform in history is also set to make its small to medium
businesses more transparent.

On July 1, as India rolls out its landmark national sales tax, businesses that make less
than 100 million rupees which the government refers to as micro, small and medium
enterprises will all have to digitise

The GST filings are expected to be one of the most significant data points for flowbased
lending, given the authenticity and complete information of an SME’s financial health. Flow based lending entails lending based on cash flows of a company as opposed to collateral or asset based lending. “GST data will become the largest repository of verifiable cash flows and transactions of business.

While small and medium businesses are expected to face teething trouble in complying with the Goods and Services Tax regime, the new tax system will also open an opportunity for them to access credit as GST filings are set to become a significant
data source for flowbased lending.

Small businesses are the backbone of Indian economics. They drive the velocity of
country’s economics, industrial growth, and catalyst for job creation. However, a large
number of businesses in the country are unorganized and irregular in filing returns and
paying taxes.

This could be due to knowledge gap, situational issue or perception among businessman
that they are small in size, operations and earnings, and it is okay to miss the deadline.
As a result, they end up getting a notice from the tax department demanding tax payment, interest, late fee and penalties for noncompliance.

Especially in case of VAT dealers, the severity of consequence in terms of monetary impact is lesser to extent of additional cash outflow to the extent of default.

GST, a comprehensive indirect tax system is all set to subsume a host of existing indirect
taxes and with its implementation, compliance will become a key factor for the success and credibility of a business. GST works on a selfmonitoring mechanism, which is matching the concept of invoice between supplier and recipient of goods and services.

Only after matching of invoices and payment of tax by the supplier, the input tax credit will be available to the recipient.

Thus, a customer will always want to do business with vendors who are compliant. This results in a change of relationship between supplier and recipient from ‘customercumemotional relationship to compliance relationship’.

Hence under GST, noncompliance will not only affect your cash outflow in paying fines, interest, and penalties but also affect the continuity your business and compliance rating.

There will now be four different rates for indirect taxes on goods and services: five, 12, 18 and 28 percent. Except, of course, there are actually five rates, since some things won’t get taxed at all, so zero percent should also be in that list. An additional surcharge will apply to some high tax products and the rate of that surcharge could be anywhere from three percent (on personal jets) to 12 percent (on sodas), 17 percent, 21 percent, 61 percent, 72 percent, 142 percent, 160 per cent, 204 percent or 290 percent (on pipe tobacco). For a reform meant to introduce a single, simple and low tax rate to India, this bewildering maze is a little farcical.

Monthly Statutory Returns under GST

Based on the category of registered person such as monthly return is to be filed by Regular, Foreign Non Residents, ISD and Casual Tax Payers whereas Compounding/Composite tax payers has to file quarterly returns:

In the table below, we have provided details of all the returns which are required to be filed under the GST Law.

Monthly return on the basis of finalization of details of outward supplies and inward supplies along with the payment of amount of tax.

Registered Taxable Person

20th of the next month

GSTR-4

Quarterly return for compounding taxable person.

Composition Supplier

18th of the month succeeding quarter

GSTR-5

Return for Non-Resident foreign taxable person

Non-Resident Taxable Person

20th of the next month

GSTR-6

Return for Input Service Distributor

Input Service Distributor

13th of the next month

GSTR-7

Return for authorities deducting tax at source.

Tax Deductor

10th of the next month

GSTR-8

Details of supplies effected through e-commerce operator and the amount of tax collected

E-commerce Operator/Tax Collector

10th of the next month

GSTR-9

Annual Return

Registered Taxable Person

31st December of next financial year

GSTR-10

Final Return

Taxable person whose registration has been surrendered or cancelled.

Within three months of the date of cancellation or date of cancellation order, whichever is later.

GSTR-11

Details of inward supplies to be furnished by a person having UIN

Person having UIN and claiming refund

28th of the month following the month for which statement is filed

10th of Subsequent Month Form – GSTR1

In Form GSTR1, you need to declare the details of all the outward supplies of goods and/or services effected during the month. Invoice wise details of outward supplies made to registered dealer and aggregate taxable value of supplies made to consumer are required to be declared. In case, taxable value of supply made to consumer is more than Rs 2.5 lakh and if it is interstate supply, you need to declare invoicewise details.

11th of Subsequent Month Form – GSTR2A
On 11th, the visibility of inward supplies is made available to the recipient in the autopopulated GSTR2A.

This is generated based on the outward supplies declared by your supplier in Form GSTR1. The period from 11th to 15th will allow for any corrections (additions,
modifications and deletion) in Form GSTR2A.

This is the most critical phase of filing of your return, as any omission or correction not reconciled as per the statement in Form GSTR 2A with your inward supplies register, will impact your Input Tax credit eligibility. To save time, quicker and accurate reconciliation, technology will play a key role in your compliance.

15th of Subsequent Month Form – GSTR 2
After reconciling, any additional claim or correction as per Form GSTR 2A needs to be incorporated and submitted in Form GSTR 2 by
15th of subsequent month. Based on the claim reported in Form GSTR2, ITC will be credited to your Ecredit ledger on provisional basis and post matching of invoice, it will be finalized.

16th of Subsequent Month Form – GSTR1A
The corrections (addition, modification and deletion) reported by you in Form GSTR2
will be made available to your supplier in Form GSTR1A.
The supplier has to accept or reject the adjustments made by the customer by verifying with suppliers outward supply register.

20th of Subsequent Month Form – GSTR3
On 20th, based on the Form GSTR1 and Form GSTR2, an autopopulated return GSTR3 will be available for submission along with the payment.

Final Acceptance of Input tax credit in Form GST MIS1 After the due date of filing the monthly return in Form GSTR3, the inward supplies will be matched with the outward supplies furnished by the supplier, and then the final acceptance of input tax credit will be communicated in Form GST MIS1.

The following details will be considered in the matching of invoices:
GSTIN of the supplier
GSTIN of the recipient
Invoice/or debit note number
Invoice/or debit note date
Taxable value and
Tax amount

The claim of input tax credit will be considered as matched, if the amount of input tax credit claimed is equal to or less than the output tax paid on such tax invoice or debit note by the corresponding supplier.

Also, the mismatch input tax credit on account of excess claims or duplication claims will be communicated to recipient in Form GST

MIS 1 and to supplier in Form GST MIS 2.
Discrepancies not ratified will be added as output tax liability along with interest. However, there will be some breathing space since the law provides a window of two months to ratify the discrepancies before reversing the ITC claim on provision basis.

A Way Forward

Activity. The return cycle under GST will put an end to the existing practice. Today, most of the small business prepare their returns in a day by summarizing their purchase and sales transactions. This will no longer be relevant since GST Return cycle is spread across the month.

Secondly, the businesses need to move from offline data recording to online data recording to file the return. Today, most of the small businesses port the data from their books to offline tools and file their return. This will prove to be a costly affair since, under GST inward supplies and outward supplies will be autopopulated by GSTN and need to be reconciled with books.

Technology will play a pivot role for businesses under GST as GST is highly transaction based compliance system. The technology should help you to seamlessly prevent, detect and correct the exceptions before the filing of return and reconcile your books with GSTN.

With the right technology, businesses will have timely compliance, manage cash flows better and adding up to compliance credibility.